Paid Search Spending Is Down

What’s it mean when paid search spending takes a dip? It could mean any number of things, but I think in this case it could mean that advertisers are beginning to figure out the right mix of their advertising needs.

I’m talking about numbers from the fourth quarter last year. Some interesting tidbits:

Overall ad spending went up for the year and down for the quarter

Internet display advertising spend was up 5.5% for the year and down 5.9% in the fourth quarter

Television advertising went up in both periods

Magazine, newspaper, and radio ad spending went down for both periods

Auto advertisers are spending the most

Both Amazon and eBay are spending less on advertising

But I think the most interesting thing from this study is that paid search spending was down both for the year and for the quarter in 2011. But why?

Maybe advertisers diverted a part of their ad spend budget to other channels – for instance, network TV and network radio. The ad spend for network TV rose 7.7% in the fourth quarter and declined 2% for the year. However, network radio advertising increased 4.3% in the fourth quarter while going up 2.7% for the year. Paid search advertising, on the other hand, went down 6.4% and 2.8%, respectively.

Advertisers have always been a fickle bunch. You never know where the money is going to go until it gets there. One thing for sure: radio print advertising is on the decline overall. Television advertising likely won’t go anywhere any time soon. But Internet advertising is still new enough that it stays in a state of flux. There are always new advertisers willing to give it a try and the old advertisers are still trying to figure out how to fit it into their budget optimally.

If you are an advertiser and you are trying to figure out where paid search fits into your overall ad budget, give us call. We’ve been doing this a long time.